An orphan nuclear receptor gene called OR2 has been isolated which is most closely related to the Drosophila ecdysone receptor. OR2 is expressed only in the liver, intestine, renal medulla and adrenal cortex. We originally showed that OR2 was a ligand-dependent activator by its response to lipophilic extracts of bovine serum. The OR2 activity was separated from other serum components by HPLC and silica gel chromatography for determining the structure of the molecular activator. Concomitantly, an activator for OR2 was identified by randomly surveying lipophilic compounds. Juvenile hormone (JH) III induces OR2 transcriptional activity with a potency of 15 micromolar. Other OR2 activators were found by structural comparisons with JH III and include farnesol, farnesal, farnesoic acid, farnesyl acetate, and geranylgeraniol. We have therefore dubbed OR2 a farnesoid receptor (FXR). Interestingly, the OR2 serum activity chromatographs with methyl farnesoate (MF) which is also found in urine. The metabolic precursor for these farnesoid metabolites is farnesyl pyrophosphate (FPP). FPP is the central intermediate to isoprenoids such as cholesterol, bile acids, ubiquinone, dolichols, and steroid hormones. The farnesoid metabolites form a biochemical shunt from FPP. Since farnesoids accumulate in the isoprenoidogenic tissues where FXR is found, we hypothesize that the receptor and its activators comprise an intracrine signaling system. We propose that the circulating MF represents an excreted product. Since some of these farnesoids have been implicated in cholesterol regulation and the farnesoids are found in cholesterologenic tissues, we hypothesize that FXR regulates genes for enzymes in the mevalonate pathway. Identification of these farnesoid-regulated genes is underway to corroborate or dispute this proposal.